Today, Harvard’s Berkman Center hosted a panel discussion titled "Avatar-Based Marketing: What’s the Future of Real-Life Companies Marketing to Second Life Avatars". The two-hour event took place on Berkman Island in Second Life. Panelists included the following avatars (pictured above, left to right, real names in brackets, info taken from the event’s notecard):

Razor Rinkitink (Raz Schionning), director of web services at American Apparel that just launched a store in Second Life.

SNOOPYbrown Zamboni (Jeff Paffendorf), Electric Sheep Company’s futurist in residence. He is currently leading Electric Sheep's founding involvement in ASF's Metaverse Roadmap Project and helps curate the Second Life Community Convention, State of Play, and Accelerating Change conferences.

Cristiano Midnight (Cristiano Diaz), a member of Second Life since December of 2002, created one of SL's first and longest running third party sites, SLuniverse.com in 2003. In 2004, he launched an in-world business called ANOmations, and in early 2005, he developed the Snapzilla web site.

Hempman Richard (Paul Hemp), a senior editor at Harvard Business Review. He is the author of the HBR’s recent article "Avatar-Based Marketing?"

Hamlet Au (Wagner James Au), covers Second Life society journalistically at the new New World Notes. Works as an SL consultant for both for-profit and non-profit companies, including Rivers Run Red and Creative Commons.

The event was moderated by Ansible Berkman (Rodica Buzescu), a recent graduate of Harvard College and the manager of Berkman Center's presence in Second Life.

The following transcript has been edited for clarity. Changes to the raw log may include punctuation, capitalization, order of replies, spelling. Some off-topic conversations have been omitted. Please leave a comment if you find a mistake. All hyperlinks and emphasis added by me.

Ansible Berkman: We shall begin with a small blurb from each panelist on a very broad question I'll ask them and then the conversation will be open to the audience. Please right-click on me and send me a note if you would like to participate. I'll hold a queue of individuals and call on you when the person before you has finished "speaking".

This panel has the incredible task of answering a very basic and yet large question: do virtual worlds present a significant marketing potential for real-life companies? We shall leave the moral debate on this topic for another discussion. For now, I would like invite you to frame your answer to this important question from a marketing/logistical and even technical standpoint.

Let's start with Paul Hemp/Hempman Richard, the author of the Harvard Business Review article. He'll give us a short overview of what he has written and why he wanted to bring together such various minds to chime in on this issue

Hempman Richard: Okay, well, I'm most interested in hearing what others on the panel and those in the audiences have to say about my argument that virutual worlds and games represent an unexplored opportunity for marketers of RL companies, and that avatars are in some way distinct consumers from their creators. That is, that we're not just talking about the "where " of a new mareketing frontier but the "who".

Ansible Berkman: Let's go over to Zero Grace aka Tony Walsh.

Zero Grace: I think it's worth exploring not only this virtual world of Second Life, but also other virtual worlds as well... Uh, anyway, I guess I was going to say that it's valuable to compare and contrast the varying landscapes in order to determine viability, etc. Also I'm wondering where the typist ends and where the avatar begins, in terms of being a consumer that can be targeted.

Ansible Berkman: I'm intentionally skipping Hamlet a bit and moving on to Cristiano.

Cristiano Midnight: Well, to expand on what Tony said, I do think that each environment is different and more or less viable for various reasons – SL, I think, presents the most comprehensive environment to explore this issue in. No other environment I can think of offers the depth of content creation that SL does. That said, I think any company that comes along and does not understand the environment and just treats it as another marketing venue is doomed to fail. I think, for example, the way that American Apparel has entered SL has been a very interesting and effective thing - I knew nothing of their company beforehand, and the clothes are actual clothes I would wear on my avatar. So at least marketing to me, they were quite effective -- I would be more inclined to explore their RL offerings as well.

Ansible Berkman: Thanks Cris, very good intro to your perspective on this. Hamlet?

Hamlet Au: The potential for marketing in online worlds is truly staggering, especially when you take the definition beyond straight up MMOs like World of Warcraft or user-created worlds like Second Life. For example, there's Habbo Hotel in Europe and Cyworlds in South Korea, both much more limited avatar-driven experiences, but online worlds all the same. For that matter, even MySpace and other Web-driven interfaces have MMO aspects as well. But today we're also seeing some clear examples of issues need to consider.

Online worlds very much involve social contracts in the sense meant by Nozick and Rawls, to cite two great Harvard alums. And creating a world that's ideal for marketers *and* its subscribers is a matter of finding a balance between Nozick's libertarian society and Rawls' free society with government assistance (i.e., the company in this case.) So when the social contract fails or becomes too restrictive, the dangers emerge. As we see in Cristiano's decision to close down his Snapzilla today, very much the Flickr of Second Life, in protest of Linden Lab's recent changes to the billing policy. This is actually a good thing for the vibrancy of the world, just like the tax revolt of three years ago was. Hopefully LL and the residents will strike a compromise between their interests. The larger moral for marketers is to understand in online worlds, especially user-created worlds like this one, the consumer is also the creator, and you have to work with them together on creating a worthwhile experience.

Ansible Berkman: Now, moving on to Snoopy.

SNOOPYbrown Zamboni: First thoughts. Virtual worlds face what i call "the gravity of reality" (truly a force) on a number of fronts. A couple of big ones: As people spend more time using virtual worlds that are web-connected, they'll want to sew them into the rest of their lives -- identity, friendship, and work-wise. So it makes sense for outside offerings to come in and mingle with the homegrown fruit. It's natural. Over time that distinction will blur. Also the massively multi-player VW industry itself is changing. We're moving from Blizzard's throwing $100 million top-down at fantasy games like World of Warcraft to much smaller amounts of money; going into smaller, flexible, networked virtual environments like we see with Second Life and soon Multiverse and others.

Environments where anything can be built, not just dragons, and real life money is encouraged to come on in. Real life companies will contribute to that development, creating their own "3d websites", coupling virtual and real versions of their products, testing out designs, styles, and campaigns in VWs, and ultimately taking products from the VW and making them real.

Ansible Berkman: Fizik?

Fizik Baskerville: I think we should step back a bit, ask why suddenly the interest. The larger media companies have been searching for an alternative to the 'interruption model' or the classic 30/90 second TV commercial. They've been talking and needing a place for a 'real' brand immersion experience. Platforms like SL are the perfect place. The issue is, making sure that the brand immersion experience is built and created from the communities wants and needs.

Also, whenever something takes 'time', in this case the time absorption taken into VW. Companies will know that the time spent is valuable and a commodity of trade. In short, the VW experience is the brand immersion experience; that’s an exciting new era for most of the media companies and brands.

Ansible Berkman: And last but not least, Razor, the American Apparel representative.

Razor Rinkitink: Hello everyone. My RL name is Raz Schionning and I live and work in Los Angeles. I'm the Web Director for American Apparel - so I oversee our web sites, web development, and online marketing. AA opened the doors to Lerappa Island and our SL store a week ago and we're very excited about it.

Why did we do it and what do we hope to achieve? On a personal level I see Second Life as a budding example of the evolution of the “web experience”. The potential is amazing and very compelling. The constant expansion and participation is energizing. Our store in Second Life is an experiment in how we may establish relationships with our customers in this evolving medium. To speak like a marketing person for a moment, I see a strong overlap between SL users and AA consumers. They are sophisticated, educated, have money to spend, and fall into our target age range. So it makes sense to investigate how we can speak to this community. Not unlike the way we approach any potential audience in order to grow our business.

That said, I have few expectations about generating significant revenue right now – it's not the objective at this point. As with all the marketing we do, we’re being innovative and keeping our ears to the ground; we want to see how people will respond to our presence in SL.

Ansible Berkman: And now, we already have a few questions lined up. Let's see what the audience has to say. Divo?

Divo Dapto: My question is what essentially is the difference between the real world and virtual words - from a marketing communications perspective? In other words, what opportunities do virtual worlds offer that real world does not?

Hamlet Au: Marketers need to be playful, need to embrace the fantasy aspect, need to embrace the ability to suddenly morph into a squirrel with a jetpack or just like I did, jump on the table and start playing air guitar.

Fizik Baskerville: Most of our clients are interested in developing brand equity, not sell directly, therefore, the gap between RL and VW marketing is really blurred.

Boliver Oddfellow: If I might make so bold the key to reaching today’s end users in this marketing space can be summed up in the words: don’t sell me, play with me.

Fizik Baskerville: By building a relationship and creating content that adds values, it’s a two way dialogue. As Boliver just said, its about giving 'props' for people to add value to their VW experience. Very much as we've just done with the BBC and 20th Century Fox.

Tetherdown Book: My consumption in VR worlds is friction free, so I've gone nuts - bought houses, clothes, shoes galore. In the real world, I can't buy a stamp, I hate shopping so much. So there is a giddy quantity to virtual consumption which is playful.

Boliver Oddfellow: Which begs the question re retailers entering this space like AA, is taking a “if we build they will come” approach enough or do you have to imbue your sim with some sort of playful corp culture?

Ansible Berkman: We can move on to Jeff's question.

Jeff Wakawaka: First, I wanted to say hi to all of the panelists and that I'm very excited I got to come see this. I've been talking about it at the office all week and everyone now thinks I'm a freak because I nearly wet myself over a virtual panel discussion on avatar-based marketing.

Anyway, I know that both American Apparel and Rivers Run Red, as well as a host of other companies (both virtual and real) that I haven't mentioned have created branded experiences within Second Life. From an advertiser's perspective, what are the types of quantitative results (specifically with regards to engagement) that I should expect from doing something similar? And what recommendations does each of the panelists have for balancing both an advertising client's interests with maintaining the cultural integrity of Second Life?

SNOOPYbrown Zamboni: Last question is interesting because many of the groups wanting to get in from the outside aren't interested in the 250,000 "accounts" currently in sl but want to build a space that their existing communities can come into. They don't want to disturb or in many cases even interact w/ an existing culture here.

That's unique to sl w/ its country metaphor but that is changing too. See the flight to islands -- it'll be a flight to networked spaces soon.

Hamlet Au: I think Second Life has long passed the days where it was a hothouse utopia where any hint of the outside world, especially the corporate for-profit world, causes much of a ripple. Now the challenge is to create cool, lasting, *exciting* experiences--and the companies are competing on an equal level with the best creators in SL.

SNOOPYbrown Zamboni: Resistance has systematically fallen. Been fascinating to watch. I remember the days when you couldn't get an island. Fizik here got the first
and some ppl thought the sky was falling!

Boliver Oddfellow: That is THE key: if you don’t make your corp presence here both interactive and immersive so that you provide the end user with a brand positive experience then you are truly missing the boat.

Ansible Berkman: Goh, you had a comment about spamming, which may be appropriate now?

Goh Mfume: Ah, yes. There are concerns about commercial spam and adverts entering VWs... but it's a bit ironic that spam and adverts are already here...just look at what players have done in SL. billboards everywhere.

Glitchy Gumshoe: Isn't it just that putting up billboards is a lot cheaper and easier to do then designing environments?

Goh Mfume: It's already here, and companies will have to compete with all the individual entrepreneurs to be heard.

Cristiano Midnight: To address Jeff's question, as well as the issue of spam...again I think that any RL company that comes into the enviroment and does not understand it is doomed to fail.

Boliver Oddfellow: The real world company that comes in here and [does] strictly a billboard campaign will learn very quickly why you don’t alienate the consumer base. It’s suicide.

Razor Rinkitink: Look at early web pages with blink tags and crawling marquees. It takes time to learn subtle techniques.

Cristiano Midnight: Second Life residents especially have been very sensitive to the encroachment of the big bad RL business...not in the forms we see, but in the dreaded form of Coke billboards spread all across SL and plastered on buildings.

SNOOPYbrown Zamboni: Most companies (to generalize) coming in from the outside should have their own private space, an island, and invite ppl to come to them.

Cristiano Midnight: Companies that really get SL and understand how to take a more lifestyle approach to their marketing will have far more success than those who just treat SL as another ad buy opportunity.

Fizik Baskerville: Actually just one thing. In RL billboards rely on 'footfall' and 'eyesballs' to work, in SL we have no major routes or areas that fit that RL convention. Therefore it really shouldn’t be a problem here, especially since p2p tp.

Ansible Berkman: Susi?

Susi Spicoli: Do you think that we will go beyond traditional marketing: participation in product development, open-source like, which makes traditional marketing obsolete to some extent because consumers are designing their own products? For example, a bank might design (with users)/test their future offering incl branch lay-out, which then already will have a strong in-world following which will spill into the RL. Finally, you might get some great international ideas fertilization (easy in SL), what if Italian customers would give comments and ideas on American Apparel?

Glitchy Gumshoe: Yeah, has any one company (besides the defeat george bush guy) ever tried to market anything to the entire SL population?

SNOOPYbrown Zamboni: I'm interested in sl as a test bed for rl products/creations.

Csven Concord: I think we'll see some of that happen. There's a recent entry on the Mass Customization blog that gets to some things being tried in Europe but I think that most people aren't aware of how much tedious stuff goes into products and so there will always be some "professional" stuff that isn't really done in a collaborative way but mostly because no one wants to do it!

Susi Spicoli: That's what people said before Linux and the success of open source.

Csven Concord: The difference between Linux and designing the boring, legally necessary font on an iron are a ways apart, imo.

SNOOPYbrown Zamboni: Coming up on the xbox 360, as I understand it, you'll be able to design your Nike sneakers in a basketball game using the id system, then have a real pair shipped to you.

Csven Concord: I have a source at Nike. And when they first introduced their shoes in NBA 2k6, the word was that it would be linked - eventually - to the website not seen it yet, but I expect it'll soon happen.

SNOOPYbrown Zamboni: Stylehive has some of that, virtual-real coupling of merchandise.

Hempman Richard: That goes back to my hobby horse: does the fact that we're avatars allow US to try stuff out that we might not try in rl? And get used to it and then buy the product in rl?

SNOOPYbrown Zamboni: I love your idea that avatars double the consumer but... you can also have multiple avs all trying out different avenues of self expression.

Razor Rinkitink: We have certainly talked about trying things in SL that would be difficult to test in RL. Store layouts and even clothing concepts would be interesting to test. But it would be important to remember that the SL audience is rather different from the RL at-large. So how much of that could feed back into RL is not clear.

Fizik Baskerville: We're working with a lot of our clients in SL doing exactly that, Raz.

SNOOPYbrown Zamboni: But when you are using sl to model, it doesn't matter who's here now, right? You just use it to sketch and design and then show it to ppl, in sl or out.

Hamlet Au: The challenge with testing real life designs is presenting it in a way that's fun, a kind of game. Otherwise, people will get bored and fly (literally!) off in search of something that is fun.

SNOOPYbrown Zamboni: Yes and no, Hamlet. It depends on if they're shopping for their real life selves, in which case they're going to want things that would, erm, "fly" in the real world and a realistic avatar to boot. One thing I'm very interested in is the recreation of real life in VWs.

SNOOPYbrown Zamboni: An avatar that reflects your appearance, when you want that for dating, trying things on, doing business, etc.

Hamlet Au: I dunno, SNOOP, I think even then the constraints (or freedoms) of the world will impose themselves. For example, has anyone here ever tried walking, just walking, through an SL building? It gets frustrating. You get stuck in doorways. You eventually just want to fly or teleport to wherever you were headed, most times.

SNOOPYbrown Zamboni: That's because sl is limited atm lol. Have you driven down the streets of Grand Theft Auto? Runs like a breeze. Oh, and of course p2p teleport, but it'll get easier to run around

Ansible Berkman: You're ok running in SL too, as long as the building space is large enough. maybe it's a matter of better designing the space.

Ansible Berkman: If no one else wants to add here, Jangles...your question please?

Jangles Junot: Thanks, Ansible. This is quite an experience. So a question for Razor... If you could buy apparel in the AA store here and get it in the real world, that would be interesting... is that in your thinking? I'm thinking of the impulse. you see something here and you want to buy it... so you order here rather than go to a browser and go to the website.

Razor Rinkitink: It could go that way, but I'm not sure that a buying experience in SL connected to RL is ideal. I'm expecting that people will be curious enough to go out and see our stores and our online store for those types of transactions. But it makes sense to build a smooth transition.

SNOOPYbrown Zamboni: And razor, please please please get some posters of sexy avs up in rl aa stores and advertising ;)

Jangles Junot: Yes, i'm thinking of that relationship, another facet to building it.

Razor Rinkitink: I really do like that idea.

Cristiano Midnight: It appears that the main grid has been attacked and the system may be taken down, so this island may go down as well soon.

SNOOPYbrown Zamboni: To the bat cave!

Csven Concord: *gets camera out*

Ansible Berkman: Until we're taken offline, let's proceed as planed.

Razor Rinkitink: Before the world ends... anyone who feels like checking out our RL store, please visit: http://store.americanapparel.net ... and while you're at it, pop in the promo code BERKMAN and you'll get 15% off for the next couple of days.

Komuso Tokugawa: Now, that's marketing to avatars!

Hamlet Au: It's worth noting that grid-attacks like this are relatively rare but definitely worth considering in relation to how you create your marketing experience.

Gideon Television: I think rl/sl purchase linking in the other direction is more likely - I buy an AA clothing article in RL and then can wear it in SL too.

Razor Rinkitink: AA will do a discount in July off any item purchased SL... on that same item in RL. Going the other way is more... complicated. But could be done.

Ariel Spoonhammer: A barrage of questions to Razor: How did the SL store get approved internally within AA? Why did you opt to sell clothes for what in SL is a significant amount of money instead of giving them away? Do you plan to advertise your store both in RL and SL? Do you think SL is the kind of place where AA's "risque" ad strategy can go even more "risque"?

Razor Rinkitink: I remember when I pitched the idea to the creative team here - the people who handle our print and traditional marketing - they were totally perplexed and a little scared. But they were kind enough to give me the benefit of the doubt. And now they are very excited about the whole thing. It's been fun to see the come around. It's especially fun to see everyone creating SL accounts for the first time - the room erupts in giggles!

SNOOPYbrown Zamboni: Is the ceo in here?

Razor Rinkitink: Our CEO, Dov Charney, is not on SL... yet

SNOOPYbrown Zamboni: He's an avatar already! Interesting character :)

Cristiano Midnight: I think, speaking as a consumer, the clothing at the AA store is in line with pricing in SL, especially given the fact that you get the same item in about 20 colors.

Razor Rinkitink: The price is really just a token sum.

Cristiano Midnight: I think it was important for you to not just give the clothes away though, for them to have some perceived value

Razor Rinkitink: Yes, indeed. If they were giveaways they would have no value.

Razor Rinkitink: About the ads... Can we be more risky? I think we need to be ourselves no matter where we are. It would be odd if we went R-rated in SL and I think it would not make sense.

Cristiano Midnight: I would say you are already pretty close to that, without crossing the line into full on soft porn.

Razor Rinkitink: Yes (chuckles) many would say that. And some people don't like that. I appreciate that perspective. We're not for everyone.

Cristiano Midnight: I'm not saying I mind it, I just don't think it can get much more risque without crossing a line that wouldn't serve you well.

Hamlet Au: I would even encourage more raciness, myself, which is, after all, kind of a roleplaying experience in itself. People want fashions that are a step or two (or three, or four hundred) from what they usually wear IRL.

SNOOPYbrown Zamboni: No one's talked about virtual sex appeal here yet, when that's such a big thing in rl.

Razor Rinkitink: The boundaries are much broader and many things are possible, but I'm talking about maintaining a personality. Keeping the brand at the center regardless of the medium.

Cristiano Midnight: Yes, Starbucks is Starbucks - you don't open up an adult version in SL called Starfucks if you are trying to maintain the brand

Hamlet Au: Think American Apparel in Amsterdam, would be my advice. :)

Razor Rinkitink: We are already in Amsterdam... and no brownies or ladies for hire.

Ansible Berkman: Last question for today belongs to In Kenzo.

In Kenzo: Good timing, too. I have a conference call in 15 minutes with a potential new partner. They know NOTHING of SL. My question regards how to explain the possibilities here in just a few words on a phone call....

Csven Concord: One word: data

Hamlet Au: "Second Life is MySpace meets YouTube meets Flickr meets World of Warcraft. Get on now or be left in the dust of Internet history."

Razor Rinkitink: You'll need to send them some screenshots at the very least, because any description you can dream-up will fall short.

Cristiano Midnight: I think the two most compelling things that really show the potential of SL quickly are screen shots and video. I know that Linden Lab has often used Snapzilla to show off what SL is, because the pictures are often very evocative

SNOOPYbrown Zamboni: "like an open-ended video game with no game, where you can build anything and connect to the web."

Cristiano Midnight: I don't think you can explain SL to someone really, other than in very broad strokes, or in sort of obtuse ways.

Cristiano Midnight: However, showing my mother Snapzilla, she understood what SL is at least to a degree that she could wrap her mind around it.

Hempman Richard: How do you show them that there is something conceptually interesting before they freak out on the photos?

Boliver Oddfellow: All I say is log in and see.

Cristiano Midnight: I would say that the initial user experience is so bad that just saying "try SL" is not a compelling way to get someone to envision it.

SNOOPYbrown Zamboni: At first ppl think you actually have to pretend the whole time :)

Csven Concord: When I explain that to someone, I ask them if they've ever seen on the News a story with a 911 call and if they felt ... touched or affected by the voice. That's television - a passive medium - giving the viewer something less connected to them than what they'll have in here. It's difficult to comprehend, but seeing how we react to other "virtual" things helps.

In Kenzo: I think SL has the potential to bridge out to TV audiences, to convert them into active participants.

Razor Rinkitink: What a potential customer really wants to see and hear is a group of users around the computer who have never seen it before. The excitement it produces is amazing. As I sit here people have been gathering around with slack-jaws.

Hamlet Au: Another shorthand I use: "It's like playing Legos (tm) with hundreds of thousands of people all over the world."